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Monopoly may create gold black market
Right after the Governor of the State Bank of Vietnam Nguyen Van Binh announced before the National Assembly that SJC will become the gold brand of the State Bank of Vietnam, worries have been raised about the arise of the monopoly which may lead to the existence of a gold black market.
A solution avoid shocks
Gold has been very popular in Vietnam, and it has always been a very important role in the national economy. However, the management had been loosened for a long time, while the watchdog agency still has not finished the compilation of a draft decree on the gold market management.
It is understandable why the watchdog agency needs to be cautious when drafting the legal document, because gold is a “sensitive goods”. The new decree aims to different goals: strictly manage the gold market, stop the habit of using gold in payment, eliminate the existence of too many bullion gold brands, stop speculation and mobilize resources for the economic development.
However, right after the draft decree is opened for collecting opinions, analysts have warned that the new regulations would cause side effects, or even cause shocks to the market.
The thing that people most worry about is not that the new decree sets up stricter control on the gold market management, but that the decree would cause the monopoly on the market.
Over the last two weeks, people have been rushing to bargain away non-SJC gold (the prices of non-SJC gold were lower by hundreds of thousands of dong than SJC gold), because they feared that non-SJC gold would not be allowed to circulate on the market. However, they later felt regretted their decision, because the State Bank has announced that non-SJC gold will still be in circulation after the new decrees is issued.
Admitting that it is necessary to set up new strict regulations on gold management, but experts say that it will take a long period to put gold under management.
While setting up optimal goals, it is necessary to ensure that the conditions are good enough to ensure the feasibility of the goals. Once stipulating a series of new regulations, which may lead to the changes of the nature of the gold market, it is necessary to set up a roadmap to implement the new regulations, in order to avoid shocks and side effects.
In long term, experts say, the most important measure to keep gold under control is to restore people’s confidence on the local currency. This would help lessen the people’s demand for gold to keep as assets.
Gold black market?
To date, the concept of “dollar black market” has become popular to all urbanites, especially in Hanoi and HCM City. Here in the black, all the demand of people can be satisfied, if buyers accept to pay high prices.
The dollar black market has been existing for the last many years despite a lot of efforts by the State Bank to eliminate it. Though the State Bank keeps tight control over the dollar, banks cannot satisfy the demand, people still have to seek dollars on the black market.
People fear that a gold black market would appear after the monopoly is set up, as the demand for gold is very big, and even bigger than the demand for dollars. While dollars are only spent in cities, towns, gold is trade everywhere, from urban areas to cities, from farmers to intellectuals. What will happen if the gold demand cannot be satisfied? Will people seek demand from the black market.
The Saigon Jewelry Company (SJC), which is now holding 90 percent of the market share, may belong to the State Bank. Governor Nguyen Van Binh said that this will help the State Bank to more easily intervene the market when necessary.
When necessary, SJC may be renamed to SBV (the abbreviation of the State Bank of Vietnam).
Dung Quy
vietnamnet
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